Numerous Royal Mail users eligible for VAT reclaim
Organisations potentially able to reclaim many thousands of pounds from HMRC; claims should be lodged as soon as possible to maximise pay-back, says Smith & Williamson.
Mail-order businesses, internet retailers and other business users of certain Royal Mail services including Parcelforce are potentially eligible for a VAT reclaim going back four years. Any business with individually negotiated arrangements with the Royal Mail covering mailing services (including Parcelforce) could be in line for a VAT pay-back but those involved in large scale mailings will have most to gain. This opportunity has come to the fore as HMRC confirmed on 31 March that it will consider claims from certain Royal Mail users.
“I believe there could be thousands of businesses up and down the country, both large and small, which could benefit,” said Hannah Dobson, VAT director at Smith & Williamson, the accountancy and financial services group.
“To maximise their claim, organisations should lodge their request as soon as possible. Retrospective VAT claims are capped at four years, so every day of delay reduces the potential reimbursement. Typically, organisations which have individual contracts with HMRC may be able to recover up to 7/47 of the gross cost of those services,” added Ms Dobson.
It was announced in last week’s Budget that parcel services of this kind will in future be subject to VAT. However, this followed a decision by the European Court of Justice which held that VAT should have been charged all along - and it is this ruling which has opened up the possibility of backdated claims.
“A number of organisations have already lodged VAT reclaims on the back of this case. Despite initially stating otherwise, HRMC has now confirmed that it will consider such claims.”
“Charities, Universities, the insurance sector, the financial services and others who can only partially recover VAT are often involved in large scale distribution of mail through the post including leaflets, flyers, brochures etc. Going forward they will clearly be worse off, but even they may be eligible for substantial claims for the past.”
“Given that HMRC has now said that it will look at these claims, businesses should press ahead urgently,” concluded Ms Dobson.
Disclaimer
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
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Smith & Williamson is an independent professional and financial services group employing around 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Birmingham, Bristol, Dublin, Glasgow, Guildford, Salisbury, Southampton, and Worcester.
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